Inner Circle Form of the Month: Creative Finance Flowchart
The awesome thing about creative finance is that it’s…creative. With a cooperative and motivated seller and a little knowledge about technique, you can put together all sorts of cool deals with low or no money down, flexible payment terms, no qualifying—all kinds of cool things.
HOWEVER, one of the biggest issues I’ve seen Inner Circle members dealing with over the years is deciding WHICH creative finance “technique” is the most sensible one to use in a particular situation.
And I get it: a lot of these ways of tying up/controlling houses creatively look awfully similar: they mostly have a price, and a payment, and a length of time that they run. Many of them would include an interest rate, even if it’s 0%.
But they’re NOT the same. Some (subject to, owner held mortgage, private mortgage) get you the deed, which is CRUCIAL if you’ll be putting any significant money into down payment or repairs, and crucial if you’ll need to borrow additional money for fix-up. Some just flat out don’t apply to certain situations—you can’t buy a property subject to if there’s no underlying loan, and you can’t buy with an owner held first mortgage if there IS an underlying loan.
This handy dandy flowchart should help you understand what questions you should be asking yourself before choosing a creative strategy on any particular property.
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And remember, you don’t have to go it alone; if you have a creative deal on the table, post it to the Inner Circle member page and we can work through what the right strategy and terms might be.